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Apple Denies Rumor That It's Shutting Down Its Beats Music Business

The alleged shutdown began as a reported rumor, but Apple quickly shot down talk about such a move, responding relatively quickly—for Apple—to the "news."

A Sept. 22 report that Apple is planning to shut down its Beats Music streaming music division just four months after acquiring Beats Electronics in a $3 billion stroke of musical creativity has been flatly denied by Apple, following a flurry of media reports about the original story and rumor.

"This is not true," Tom Neumayr, an Apple spokesman, told eWEEK during a terse telephone call on Sept. 23. Neumayr then refused to comment further about the original report or about what Apple might do with its Beats Music business in the future.

The original report about Apple shutting down Beats Music was allegedly based on information from several anonymous sources, but that report was quickly shot down by Apple, which was unusual on Apple's part. Usually, Apple, like other companies, remains stoic about reports and rumors it doesn't want to discuss publicly, but on this story, Apple got its message out relatively quickly.

Apple bought Beats Electronics in May, which included Beats Music as well as the company’s headphones business, after rumors had been circulating about the transaction for almost a month, according to an earlier eWEEK report. The purchase was made with $2.6 billion in cash and $400 million in Apple stock. Beats Electronics, founded by rapper Dr. Dre and pop music producer Jimmy Iovine, makes high-end headphones and also operates Beats Music, the popular streaming radio service.

Further reading

What Apple plans to do with Beats Music in the future is still uncertain, and the company isn't really talking about its plans. The denial of the closure rumor certainly doesn't mean that Apple would never take such an action, nor does it mean that Apple will always operate the company as a separate division as it does today. At this point, Apple watchers will just have to wait to see what happens next with Beats.

At the time of the Beats Electronics purchase, Apple did show that it is getting a little less proprietary and a lot more open-minded in its delivery of musical content to customers. The Beats Music part of the deal, which many observers think is the key to the entire transaction, shows clearly the Cupertino, Calif.-based company's intention to move to a multi-platform approach.

At the time of the acquisition, Apple CEO Tim Cook said that the company will continue to operate Beats Music not only on Apple's iOS devices but also on Google's Android and Microsoft's Windows Phone operating systems, marking the first time that Apple would offer a music delivery system that works with a rival's devices and systems, according to a report by The Financial Times at that time.

The budding streaming audio service that Beats Music had in place prior to the acquisition was seen as something that Apple could capitalize on, according to a May 2014 eWEEK report published before the deal was announced. Apple is already offering its iTunes Radio streaming service, but it could use some of the technology in Beats and bring it to iTunes. In addition, the growth of the streaming music business, especially at the expense of CD sales, was also seen as a lure for Apple in making its original acquisition.

The Beats headphones also fit nicely into Apple's product line and were already being sold in Apple stores. The team of engineers who design and envision the Beats headphones are also now part of the Apple family and could potentially be integrated into Apple at some point, adding value and audio improvements that could be very lucrative.

Beats launched Beats Music, a $9.99-a-month streaming music service for iOS, Android and Windows Phone devices, in January, according to a previous eWEEK report. Beats also made an exclusive deal with AT&T at the time, offering up to five family members with AT&T service unlimited music for a total of $14.99 a month. In addition to access to 20 million songs, the service features technology that creates custom playlists for users through personalization technology that rivals competitors.